5 Tips for Starting a Home Day Care Business

Many families searching for child care turn to home-based providers because of their smaller size and more comfortable setting. And those looking to start a business might find child care a flexible way to stay at home and earn money. Here are a few tips to help you get started.

1. Assess Your Community’s Needs

Before filing any paperwork or taking a training class, it’s a good idea to see what the demand for child care is in your area. Are parents looking for after-school care, or is a spike in birth rates indicating some may be looking for preschool programs? One way to determine trends is to look at U.S. Census Bureau statistics. The Small Business Administration recommends checking BusinessUSA for demographic information.

Scharlie Meade, a technical assistance coordinator at Child Care Council of Kentucky in Lexington, KY, says calling your local elementary school can also yield valuable information. She recommends asking questions, such as:

  • How many children are in the area or enrolled in the school?
  • Are parents asking about child care?
  • Do most families have more than one child?
  • Does the school already provide after-school programs?

The answers to these and other questions can help you understand what facilities are available and focus your home-based center on what the community needs.

2. Understand Licensing Requirements

Licensing varies from state to state and often by county, so finding and obtaining the proper licenses is the first step to building your business. There are many agencies and nonprofits to advise and help you navigate the process, such as Child Care Aware and the Federal Government’s Office of Child Care. The SBA also offers a license and business requirements database you can search by zip code.

It’s important to follow all the steps on the checklist and comply with every item. For Armineh Amirkhani, who runs Creative Kids Playschool in Walnut Creek, CA, the licensing process was straightforward but did require several steps, including a 15-hour first aid and CPR class, a background check and a list of safety measures to implement.

Most states require a home inspection as part of the licensing process to make sure you’ve complied with all the rules and are ready to receive children. Bridget Antalek of Beacon, NY, who has run a home-based day care for 18 years, advises people to not get too anxious about this part. “People get nervous about all the rules,” she says. “The rules are there to help you be that much safer.”

3. Obtain Proper Insurance

Having liability insurance for your business is required by most states. You may also want to consider adding professional liability insurance and property insurance, according to Child Care Aware. The SBA also recommends coverage for equipment, toys, supplies and other business property in your home. Some childcare providers add coverage to their existing homeowner’s policy.

While every insurance company’s offering is different, it’s important to know the minimum coverage requirements in your state. Without proof of insurance, you won’t be able to obtain a license.

4. Develop a Budget

Determine how much money you’ll need to start your business and how much you’ll need to run it. Start-up costs can vary depending on whether you need to remodel your home, obtain a zoning permit or take training courses.

“In the consultations, we try to break down what fees are required upfront,” Meade says. “People will call all the time and ask about costs, but it’s individualized.”

Lori Marschhauser, owner of Lori’s Family Daycare Home in Apex, NC, recommends factoring in expenses such as physicals and other required medical tests, background checks and fingerprinting, besides the typical toys and art supplies. Don’t forget about budgeting for meals and snacks, office supplies and cleaning supplies, as well as decorations.

“There are simple things you can do to make it good for children,” Amirkhani says. She often takes household items and turns them into toys. She asks her parents to provide larger items, like strollers, to keep costs down.

It’s also important to have a system, such as QuickBooks or a ledger, for keeping track of receipts, expenses and income. You’ll also need record storage and a filing system for paperwork.

5. Create a Marketing Plan

Meade says one of the most common questions she answers is how to find clients. It’s a good idea to create a marketing plan. You may consider having business cards, photo cards and other materials printed in order to reach prospective clients, as well as a Web site for parents looking for child care online.

Many states allow parents to search for care online using their zip code and other criteria. Marschhauser gets referrals from the North Carolina Department of Heath and Human Services search tool, but many of her children are referrals from other parents. Amirkhani has used classified ads in the local paper and finds her Web site has been a good tool for prospective parents. “It was helpful,” she says. “They can see the facility, the setting and the programs.”

While building your business can be stressful, Antalek says you need to give it at least two enrollment periods and remain true to why you decided to open the business. “You can go a year and not fill the spaces and feel like you need to change your hours or accept more kids,” she says. “You’ll find your niche and your clients. It just takes time.”

Liz Hester is a freelance writer living in Raleigh, NC.

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